Question
The price of SPDR S&P 500 ETF (ticker: SPY) on June 23rd was $422/share. You paid $4.5/share to buy a call option on SPY with
- The price of SPDR S&P 500 ETF (ticker: SPY) on June 23rd was $422/share. You paid $4.5/share to buy a call option on SPY with a strike price of $422 and maturity date of July 2nd.
a). On July 2nd, if the SPY price is $420 per share, should you exercise this option? Based on your choice, what is the payoff from this option? What is the profit from buying this option?
b). On July 2nd, if the SPY price is $445 per share, should you exercise this option? Based on your choice, what is the payoff from this option? What is the profit from buying this option?
c). On July 2nd, if the SPY price is $435 per share, should you exercise this option? Based on your choice, what is the payoff from this option? What is the profit from buying this option?
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AQA AS Accounting Unit 1 Introduction To Financial Accounting
Authors: Brendan Casey
1st Edition
1499789653, 978-1499789652
